The epic blackout that steeped half the country in darkness this week was a throwback to January 2001, when a similar grid failure plunged north India into darkness. Harsh Taneja, then a 19-year-old engineering student, was in Rajasthan on vacation with his family. They were traveling throughout north India, driving up from Chandigarh to Delhi and then taking a train to Rajasthan. Once in Delhi, they were surprised to arrive in a city in pitch darkness. “We kept hearing about power cuts the whole day, but the reality struck when we reached Delhi,” says Taneja, now a 30-year-old research student at Northwestern University in the U.S. “There were no lights on the streets or the houses, the darkness on the roads broken only by car headlights. At the station, it was chaos. Trains were canceled, there were no announcements, and people were roaming about with lanterns. It was eerie.”

A decade on, and it seems India failed to learn from its past mistakes. This week’s epic power outage is a bleak reminder that India’s power sector has remained frozen in time while neighbors like China have surged ahead. China’s annual electricity generation in 2011, according to the CIA World Factbook, was 4.604 trillion kilowatt-hours (kW-h) in 2011, while India produced around 723.8 billion kW-h, which is about 4% of the world’s total power generation.

Since 1951, India has consistently missed its power targets. With 44% of its population still without access to electricity, and experts warning of its detrimental effect on the country’s future growth, India’s power sector is in a mess. India cannot aspire for a 9% growth rate over the next few years, the Confederation of Indian Industry (CII) pointed out in a recent report, unless it successfully addresses the shortcomings of its power sector.

“There is a serious shortage of electricity in India. Demand is surging, and we don’t have enough of it. On top of that, our political leaders play populist games with tariffs. Ninety percent of the power industry is owned by the government, so politicization of every decision is rampant,” says S.L. Rao, a former chairman of India’s Central Electricity Regulatory Commission. Rao, who was at the helm of the commission during the 2001 blackout, blames the government for allowing political considerations to interfere with the commission’s work. “Why wasn’t [the state of] Uttar Pradesh disconnected [from the grid] when the regulator knew that it was overdrawing?” (The past two days’ outages were blamed on overdrawing of power by states like Uttar Pradesh, Haryana and Punjab.)

Policy experts have long called for reforms to address myriad challenges: a huge distribution gap, which translates into a loss of 30% of the power to theft and inefficient state distribution networks (the world average is around 15%); a fuel-supply bottleneck — India’s power generation is largely coal-based, and in recent years coal production has not been able to keep pace with the needs of its energy sector; and inadequate investment in the sector. “Repeated occurrences of grid failures carry a very negative image of India,” said Chandrajit Banerjee, director general of CII, in a statement on Wednesday. “CII has consistently been highlighting that urgent steps need to be taken for addressing key issues ailing the power sector, such as improving the supply of coal for thermal-power plants, rationalizing tariffs and reforming the state distribution utilities.”

There is also need for more public-private partnerships. In fact, experts say that India should ideally look toward privatizing at least 50% to 75% of its new generation capacities and come up with incentives for the private sector to facilitate this. “Privatization will increase accountability, which is something lacking in state-run facilities. Accountability is important,” says Harry Dhaul, director general of the Independent Power Producers Association of India. “Wherever the private sector has entered, the situation has improved.”

New Delhi is now looking to emulate the Jyoti Gram project in Gujarat, a power-surplus state (which boasts of almost all-day and high-quality electricity supply in its cities and 18,000 villages), and add 100 GW of capacity by 2017, delivering uninterrupted electricity to all its population. With a targeted $400 billion in public and private investments, a successful local model and a generous dose of political will, India’s power sector need not be written off just yet. But many wonder why it had to come to this.